U.S. support for foreign company

Friday

Apr 29, 2011 at 12:01 AM

Donald Trump wanted to see President Obama's birth certificate. I would like to see his college transcript. Did the president take Economics 101, and if he did, did he get a passing grade? At least a C-, I hope.

In July 2010, the president held a media event at LG Chem Ltd.'s facility in Holland, Mich. LG is a Korean lithium-ion battery manufacturer, and the U.S. government gave it a $151 million grant. The government also gave two U.S.-based lithium-ion battery manufacturers grants for $249 million and $118 million, respectively. LG's website lists three manufacturing facilities: two in South Korea and one in China. It has an R&D facility in Michigan and a marketing site in South Carolina.

General Motors and Ford purchase their lithium-ion batteries from, you guessed it, LG Chem. Ford did not receive a $50 billion bailout, so it should be able to do whatever makes economic sense.

Why would anyone purchase an electric car? One reason is the $7,500 federal income tax credit. Here is where the Economics 101 comes in. The United States gives a grant to a profitable Korean-based company and a $7,500 credit to entice people to buy electric cars. The two U.S.-based battery companies are struggling and are projecting losses for the foreseeable future, if not forever. In effect, the U.S. is subsidizing a foreign company with a direct grant and enticing our citizens to purchase cars with the foreign batteries by giving a federal income tax credit. Go figure.

President Obama should be holding a media event in South Korea, not the United States.

Daren Miller

Horsham Township

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